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Bitcoin has maintained its position as the foremost cryptocurrency globally for the last ten years. At the start of 2011, BTC was not regarded seriously, but by 2022, this digital currency held billions of dollars from major institutional investors. Throughout its history, Bitcoin has experienced both swift rises and significant declines. Here, we will examine five of the most notable crashes in the history of the first cryptocurrency.
Mt.Gox Hack: June 19, 2011
The initial crash of Bitcoin was particularly significant. In early 2011, the price of the cryptocurrency reached $1 for the first time, and by mid-2011, it surged to $32. At that time, Mt.Gox was the largest platform for BTC transactions. According to Bitcoincharts, by August 2013, around 47% of transactions within the Bitcoin network were conducted through Mt.Gox.
On June 19, 2011, Mt.Gox was compromised, leading to a brief drop in price to one cent. The attackers took advantage of a software flaw and stole approximately 2,600 BTC, selling them to themselves for just a few cents. Various reports indicated that the losses amounted to around $8.7 million. Following the incident, BTC fell to $17, representing a decline of over 50% from its previous value.
The security measures were rectified shortly after, but vulnerabilities remained. Consequently, by the end of February 2014, hackers managed to withdraw between 650,000 and 850,000 BTC through double-spending, as revealed by a leak of internal information. This was valued at about $450 million at the time and contributed to the subsequent significant decline, among other factors.
Chinese Veto: December 2013
In 2013, the price of the first cryptocurrency experienced both declines and impressive gains. The price fluctuations were as follows:
- From January to April — from $13 to $230;
- Late April — the price dropped to $68;
- From May to November — the price rebounded to $200.
In December 2013, Bitcoin achieved new record highs, with each coin valued at over $1,151. However, due to China’s stringent regulations that prohibited any transactions involving BTC overnight, the price more than halved.
Bitcoin remained highly volatile for a considerable portion of 2014. By January 2015, BTC had fallen below $200. It took another two years for Bitcoin to reach the $1,000 threshold once more.
The Great Crypto Crash: December 2017 — 2018
In late 2017, Bitcoin reached a new all-time high, with the price per coin hitting $19,497. At that time, cryptocurrency exchanges in South Korea began restricting new account registrations as the excitement surrounding Bitcoin peaked. By the end of 2017, BTC had fallen to $13,000, a decline of 30%!
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In February 2018, BTC’s value continued to decrease, dropping below $6,000. For the following nine months, Bitcoin fluctuated between $6,000 and $10,000. By December 2018, its price had plummeted to a low of $3,300, seemingly aiming for its lowest point.
It is noteworthy that this decline occurred while the crypto community began to focus more on Ethereum, which secured its position as the second-largest cryptocurrency around that time.
The Pandemic: March 2020
The COVID-19 pandemic that emerged in 2020 inevitably impacted Bitcoin’s price. Contributing factors that significantly affected the leading cryptocurrency included:
- global lockdowns and economic downturn;
- public panic;
- stock market crash, etc.
During the first half of 2020, short-term investors liquidated a majority of their crypto holdings. BTC fell from $9,000 to below $4,800 in just a few days in March 2020. By the year’s end, the cryptocurrency market had begun to recover gradually, driven by quantitative easing policies and increasing interest in the industry.
In the first half of 2021, major corporations like MicroStrategy and Tesla actively invested in Bitcoin. According to CoinMarketCap, as of April 13, 2021, the price of 1 BTC was $63,503, marking another record-breaking moment for the first cryptocurrency.
The Rebound: May 2021
Another significant price drop occurred in May 2021. The decline in BTC’s value was quite pronounced. By May 22, 2021, Bitcoin had fallen below $35,000, marking a two-week decrease of over 35%. Additionally, the total market capitalization of the crypto sector decreased by more than a third, down to $1.58 trillion. Key factors contributing to the May decline included China’s ban on cryptocurrencies and Tesla’s withdrawal from Bitcoin due to concerns over the cryptocurrency’s environmental impact.
The downturn persisted for several months, with a local low reached in July when the price fell below $30,000. However, in November 2021, Bitcoin achieved a new local high exceeding $69,000. By the end of 2021, the price settled at $46,000 per 1 BTC.
Market Current State
As of April 21, 2022, the price of Bitcoin stands at approximately $41,600. Recent fluctuations have reached 30%, clearly demonstrating the high volatility and reaffirming its classification as “a high-risk asset.”
Nonetheless, the cryptocurrency market has exhibited stability over the past few years. Incidents like the hacks of cryptocurrency exchanges, similar to the Mt.Gox case, appear less likely now due to significant improvements in security measures. Furthermore, Bitcoin has already demonstrated its ability to recover following substantial price declines. Consequently, long-term holders continue to accumulate BTC in their portfolios, disregarding temporary setbacks such as price drops of several thousand dollars within a short period and predictions of a “crypto winter.”
